Medtech Monthly "Performance out in the cold, but interest warming up" Doyle

Research evidence excerpt

Medtech Monthly "Performance out in the cold, but interest warming up" Doyle

Our top picks

FigureSource:UBS4: estimates,UBS coverageDatastreaminasorderof 29 Juneof preferenceUBS2026

Top Buys:

Convatec: Top pick. Trading at 14.0x 2026E PE or c.20% sector discount despite above-

sector earnings growth historically (10% CAGR vs. 2% sector average since 2022) and

going forward (UBSe c.11.5% 2026-30 CAGR vs. c.10.5% sector average). We think

this delivery is supported by a resilient business model (90% of revenues recurring) and

plenty of optionality (up to 3% potential upside to our 2030 estimates from new

product launches and M&A).

Philips: Preferred turnaround story. We think the business is healthier than it has been in

recent history, with accelerating order growth derisking mid-single-digit revenue

growth, the product pipeline reinvigorated, litigation overhangs fully addressed, and

plenty of contingency baked into near- and medium-term margin targets. Still, the

PE discount to the sector is 15% and not far off the historical average discount outside

the most intense recall period, despite the much improved portfolio and cost base.

Top Sells:

Elekta: Our structural, data-backed Sell thesis argues radiotherapy patient and

procedure volumes are slowing in developed markets, on top of which our deep-dive

portfolio analysis suggests Elekta will struggle to gain share in a slowing market. This

leaves us 4-12% below consensus EBIT over the medium term.

Fresenius Medical Care: Our analysis leads us to expect a long-term earnings fade

driven by a lack of recovery in near-term US dialysis volumes, and a decline in the longer

term: we do not believe either of these risks are fully appreciated by investors, and hence

think that these structural dynamics will cap the multiple.